Tesla Motors (TSLA) to Build Gigafactory in Nevada

Shares of Tesla Motors Inc. (TSLA) were trading down -2.04 or -0.71 percent to $284.00 per share in premarket trading this morning, after news late yesterday that the company had confirmed the state of Nevada to build its new Tesla Gigafactory. Tesla stock closed at $286.04 per share, up +4.85 or +1.72 percent in Thursday's regular trading session.

Palo Alto, California based Tesla Motors Inc. is a world class electric auto manufacturer that produces two fully electric powered automobiles at the company's single plant in Freemont, California.
The Tesla Roadster and the Tesla Model S, the first fully electric sports car and luxury sedan ever produced. Tesla Motors also markets electrical components to other automakers such as Daimler and Toyota (TM). These include electric powertrain components and lithium-ion battery packs used in electric and hybrid models.

Nevada was awarded the deal in exchange for a tax incentive package put together by Governor Brian Sandoval. The tax incentives could be worth as much as $1.2 billion to Tesla over 20 years, but will still generate over $1.9 billion in tax revenue for the state. The incentive package break down:

Tesla Chairman and Chief Executive Elon Musk stated in a press release, "I would like to recognize the leadership of Governor Sandoval and the Nevada Legislature for partnering with Tesla to bring the Gigafactory to the state. The Gigafactory is an important step in advancing the cause of sustainable transportation and will enable the mass production of compelling electric vehicles for decades to come. Together with Panasonic and other partners, we look forward to realizing the full potential of this project .

The $5 billion plant could have an impact on the state's economy of as much as $100 billion over the next 20 years. Nevada currently depends primarily on tourism with manufacturing representing only four percent of the state's workforce. The batteries that will be manufactured at the Gigafactory will be for Tesla's first mass produced automobile, the Model 3, priced at $35,000 with a 200 mile range per charge.

Nevada Governor, Brian Sandoval stated, "This is great news for Nevada. Tesla will build the world's largest and most advanced battery factory in Nevada which means nearly one hundred billion dollars in economic impact to the Silver State over the next twenty years. I am grateful that Elon Musk and Tesla saw the promise in Nevada. These 21st century pioneers, fueled with innovation and desire, are emboldened by the promise of Nevada to change the world. Nevada is ready to lead .

The Gigafactory, which will be constructed in Reno, is projected to employ 6,500 workers and have a yearly production of 35 gigawatt hours of battery cells. Nevada was selected over California, New Mexico, Arizona and Texas who also submitted incentive packages.

Tesla stock is reacting negatively to the news after hitting a new all-time high in yesterday's trading session of $291.42. The stock has been in uncharted territory for some time despite a negative EPS of -1.11. Nevertheless, investor perceptions continue to be optimistic.

Other News About Tesla Motors
Tesla five times overvalued: Trader
Vila Capital analyst values the company at $5-$10 billion.
Report: Tesla's Gigafactory May Be Way Too Giga
According to the report, the factory may never meet its production goals.

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Published on Sep 5, 2014
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2020. Content published with author's permission.

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